From Breakingviews - For some US banks, it’s still a wonderful life
and Signature Bank last month. But big lenders already expected to see some funds head out of the door. Bank customers are still sitting on a pile of savings manufactured by pandemic-era government stimulus and curtailed consumption. Bank bosses have been warning for two years that this would eventually wither away. To put it in context, if deposits at domestically-licensed banks had grown at their steady, pre-Covid rate over the past three years, they’d total $13.
, have yet to show evidence of having durably stabilized. Big banks can also offer customers non-cash perks. JPMorgan invests $14 billion a year on its tech, and has bought dozens of companies to burnish its offering, from restaurant guide The Infatuation to high-end travel agent Frosch. Bank of America touts its artificial-intelligence-powered financial assistant, Erica.
This edge for small banks should also insulate them from the worst effects of a deposit price war. They have only passed on 23% of the last year’s Federal Reserve interest rate hikes to their customers, according to Darling Consulting, which tracks deposit data for community banks and mid-sized regional lenders. That compares with the roughly 30% that much larger PNC Financial Services reported at the end of 2022.
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